Founders: Thomas A. Edison, Elihu Thomson, and Edwin Houston.
Distinction: Brought radio, then television, into American homes.
Primary products: Televisions, camcorders, other consumer electronics.
Annual sales: $4.5 billion.
Number of employees: 22,800.
Major competitors: Matsushita, Philips Electronics, Sony.
Chairman and CEO: S.A. Thomson and Thomson Multimedia: Thierry
Headquarters: Indianapolis, Ind.
Year founded: 1960.
Web site: www.rca.com.
Moments after the R.M.S. Titanic hit that infamous iceberg on April 14,
1912, a 21-year-old radio operator with the Marconi Wireless Telegraph
Company picked up its distress signal in his Manhattan office. The young
Russian immigrant David Sarnoff remained at his post atop the
Wanamaker department store for the next 72 hours, relaying increasingly
pessimistic reports from sea to others throughout his network. He was
unable to stop the ship's sinking, of course, but his imagination was
piqued by the way he could relay information about it around the world.
As Sarnoff rose through the ranks at Marconi over the next several years,
he couldn't stop thinking about ways to make such communication
available to ordinary citizens. In 1916, those contemplations finally
settled into a solid idea for a commercially marketed receiver that he
called a "radio music box." It would transmit songs, Sarnoff speculated,
as well as news and other programming. Most people could not accept the
notion of music and voices beaming directly into their homes, so it took a
few years before those who did were able to help make it a reality.
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Not surprisingly, when they did-through a new company called Radio
Corporation of America-Sarnoff became an integral part of it and would
remain so for the rest of his life. During that time, the entertainment
conglomerate that RCA became aided two war efforts, pioneered the
audio broadcast of live events, made the equipment that both transmitted
and received them, built phonographs and produced motion pictures,
formed the NBC network, built New York's Rockefeller Center and Radio
City Music Hall, introduced television to the public, created the standard
for color TV and produced the first sets to employ it, and even brought
images of space flight into America's homes.
Since Sarnoff's death in 1971, RCA has admitted going through some
tough times. But despite competition that cut deeply into its once
formidable position in radio and television and its sale to a French-based
firm that had a hand in its founding nearly seven decades earlier-the
company remains a significant force in electronics and a firm most
consumers still know and trust.
RCA's roots go back to Thomas Edison and Elihu Thomson, a 19th century
chemistry teacher at Philadelphia's Central High School. Fascinated by
electricity, Thomson started a company with fellow teacher Edwin Houston
to pursue his interest just as Edison was forming the Edison General
Electric Company in New Jersey. Thosmon-Houston won a major award at
the Exposition Universelle in Paris-the 1889 event for which the Eiffel
Tower was erected-and three years later merged with Edison General to
create General Electric. Thomson-Houston's principals then returned to
France, where they established a new company with similar goals.
Around that time, Guglielmo Marconi was preparing his first wireless
transmission. The electrical engineer's pioneering work quickly led to the
establishment of Marconi Wireless, which opened an American branch in
1899 and for the next two decades remained the only company able to
send transatlantic radio signals. With the outbreak of World War I,
Assistant Navy Secretary Franklin D. Roosevelt determined that such
technology should rest in U.S. hands and turned to General Electric for
help. In 1919 GE responded by forming the Radio Corporation of America,
which took over American Marconi and began marketing the related
equipment that it was producing.
There were barely 5,000 radios in American homes when RCA began, and
only the Westinghouse Company was broadcasting commercially. That all
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changed quickly, however. David Sarnoff, who moved from Marconi to
RCA, jump-started the new industry in 1921 by airing the first live sports
broadcast: a heavyweight boxing championship between Jack Dempsey
and Georges Carpenter that attracted 300,000 listeners. Baseball's first
broadcast of the World Series came a few months later, and stations
began appearing around the country to tap into the new demand. By
1924, more than 2.5 million radios wee in use, and RCA had built most of
them. When Charles Lindbergh made his historic flight across the Atlantic
in 1927, some 6 million sets could tune in to the news.
Correctly assessing the potential of radio, Sarnoff bought New York's
WEAF and made it the anchor station for a new nationwide network,
which he dubbed the National Broadcasting Company. It soon had 25
member stations stretching from coast-to-coast. Its first major
transmission was the Rose Bowl football game on New Year's Day, 1927.
Much like the boxing match aired previously, it proved enormously
successful and helped radio's popularity soar. RCA, which had been
marketing sets built by GE and Westinghouse, was spun off to take over
all research and development, manufacturing, and sales operations. It
then bought the Victor Talking Machine Company and began making
phonographs as well as radios. Along with other assets, the newly
renamed RCA Victor acquired its popular "His Master's Voice" trademark
featuring Nipper the Fox Terrier listening intently to an antique
phonograph. In years to come, this would prove practically as well-known
as any of the company's products.
The 1929 stock market plunge hit RCA hard as consumers turned away
from purchasing goods like radio sets. Undaunted, Sarnoff expanded the
company's manufacturing capacity and-utilizing NBC's talent pool-joined
with a chain of vaudeville theaters to open the RKO movie studio. He
began construction on New York's Rockefeller Center and Radio City,
which RCA and NBC later utilized as headquarters. And he set his sights
on new horizons by hiring engineer Vladimir Zworykin to help develop an
even more advanced technology: television.
Sarnoff had forecast the possibility of TV as early as 1920, and crude
pictures were already being transmitted by the time RCA entered the
game. Zworykin, one of the field's pioneers, told Sarnoff it would take 18
months and $100,000 to develop a marketable system. It ultimately took
10 years and $50 million, but the two wee able to unveil RCA television at
the 1939 New York World's Fair. President Franklin D. Roosevelt, who had
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been instrumental in RCA's creation and a frequent voice on NBC radio,
became the first head of state to appear on the new medium when his
opening remarks were telecast.
Commercial development of TV halted when the United States entered
World War II, and RCA converted its plants to produce bomb fuses, mine
detectors, and even recorded entertainment for the troops. "All our
facilities and personnel are ready and at your instant service," Sarnoff
wrote to the president. As soon as the war ended, he immediately
resumed TV production and in 1946 introduced a 10-inch set that sold for
$375. The next year, as NBC began moving its radio stars onto television,
Sarnoff became chairman of RCA's board.
TV blossomed during the 1950s, and both RCA and NBC took full
advantage of the medium. They also capitalized on the budding move to
color by trumping CBS, which was first to offer it, and introducing
technology that was adopted as the industry's standard. A few months
after NBC broadcast the first live color program-the 1954 Tournament of
Roses Parade-RCA's first color set became available. The 12-inch model
sold for $1,000 but its appeal was strong. Within five years a half-million
such sets had sold and NBC's Bonanza. TV's most popular show, was
airing in color. By 1962, two-thirds of all TV was "colorcast."
By 1970, television was omnipresent and color was commonplace. RCA
brought back a little pizzazz by beaming America's space flights into the
homes of enthusiastic viewers. Its technological moves also included a
joint venture with old friend Thomson of France to produce innovative
picture tubes. RCA would change forever during the following year,
though, when leading light David Sarnoff died at age 80.
Product advances continued during the 1970s, such as the ColorTrak TV
and a four-hour home videocassette recorder. RCA also marked a quartercentury
in the color television business in 1979 by producing its 100
millionth picture tube. Around the same time, the company partly
responsible for its existence had become a nationalized French owned firm
called Thomson S.A. Operated as a holding company with more than 115
subsidiaries, it derived more than half its sales from high-tech
General Electric reacquired RCA (including NBC) in 1986 for $6.4 billion in
what was the largest non-oil company merger. Many of the assets it
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procured did not fit its master plan, however, and the following year it
sold the RCA and GE consumer electronics businesses to Thomson. The
French firm then created a Thomson Consumer Electronics subsidiary to
run them. In the early 1990s it set up American headquarters in
Indianapolis, and in 1995 changed the division's name to Thomson
RCA's share of North American TV sales, which had been slumping, rose
slightly under the new ownership. The company also introduced an audio
line based on the emerging popularity of musical compact discs, and by
the mid-1990s was second only to Sony in the field. Additional products,
such as a 56-inch television, advanced camcorders, and high-definition
TVs, also wee added to the line.
Despite its innovations and heritage, Thomson Multimedia struggled
initially and its parent tried unsuccessfully to unload it. By the turn of the
century, however, it seemed to be turning everything around. In 1999 the
American operations-of which RCA and GE comprised the majority of
sales-tallied $224 million in profits, up a remarkable 1,400 percent from
the year before. A primary factor was the consistent introduction of
appealing new products after years of stagnation, as RCA's once and
future owner renewed the pioneering spirit that had mad3e it a force in
the first place.
Founders: Bill Bowerman and Phil Knight.
Distinction: Made the sports shoe a cultural icon.
Primary Products: Athletic footwear, apparel, equipment, and
Annual sales: $8.777 billion.
Number of employees: 20,700.
Major competitors: Adidas-Salomon, Fila, Reebok.
Chairman and CEO: Philip Knight.
Headquarters: Beaverton, Ore.
Year founded: 1962.
Web site: www.nike.com.
When Michael Jordan ruled the basketball court, athletic footwear ruled
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the world and Nike was the undisputed king of shoe business. This
Oregon-based company had totally transformed the once-humble sneaker
into sporting gear-as-fashion statement. It unveiled a cool new slew of
highly technical models designed expressly for highly specific activities,
each year with more fanfare, features, and snappy names. Older fitnessconscious
consumers went for it wholeheartedly, snapping up shoes for
jogging, aerobics, walking, golf, and anything else that they could do on
two feet. And when Nike hit upon the idea of signing popular athletes to
endorse appropriate models, seemingly every kid on the planet suddenly
wanted to be like Mike, Mia, or Tiger.
But just as surely as it had defined the parameters of this sporty but
stylish revolution, Nike was singled out for both manipulating it and
running it into the ground. The firm drew passionate criticismsometimes
deserved, sometimes not for exploiting foreign
workers, raising brand consciousness to an art form, driving
prices to outrageous levels, inundating the airwaves (not to
mention sidelines) with its "swoosh" logo, even taking advantage
of the millionaire athletes who participated in its omnipresent
To compound matters, Nike couldn't sustain its performance on the field.
For years, it was the hot ticket: between 1994 and 1997, when it was
already a mature company, sales jumped nearly 150 percent to $9.2
billion. New brand extensions, like outerwear for bicyclists, constantly
appeared on the market. Swooshes turned up everywhere. For a time,
Nikes became the incontestable accessory for an entire generation. But
then, almost without warning, the other shoe dropped. Hiking boots and
casual leathers became the kids' footwear of choice. Boomers slowed
down a bit. Competitors homed in on particular niches.
Today, despite it all, Nike remains the driving force in its industry. It still
offers some 500 generally well-regarded shoe models, and even
more types of apparel. It operates giant Niketown superstores and is
opening a few Jordan-themed specialty outlets. And it continues selling
billions of dollars in product each year in more than 100 countries. But it
doesn't rule the world right now, and for Nike-accustomed as it is to
coming in first-that's an unacceptable position.
Back in 1962, few people would have picked Eugene, Ore., as the place to
start a revolution. The local University of Oregon campus had long been
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home to a successful track program. Bill Bowerman-head coach since
1948-unwittingly touched one off when he teamed up with Phil Knight to
distribute Japanese-made Tiger athletic shoes under the BRS (or Blue
Ribbon Sports) name. By 1964, they had sold 1,800 pairs. Four years
later, a Bowerman design became the parent company's best-selling
model. Emblazoned with a little optimism and a lot of ideas, he and
Knight decided to manufacture 330 pairs of their own latex-and-leather
design. Its distinguishing feature was a unique lightweight sole that was
made with a waffle iron belonging to Bowerman's wife. The two sold out
their entire supply at $3.30 a pair, and gave birth to a corporation, as well
as a revolution.
Knight, who had trained under Bowerman before pursuing an M.B.A. at
Stanford, began traveling to track meets to peddle these funny-looking
new shoes form the trunk of his car. The pair's combination of chutzpah
and creativity caught on and helped their fledging effort catch fire. They
unveiled the swoosh logo in 1971, and launched the Nike brand the next
year at the U.S. Olympic Trials in Eugene. The world's elite runners
(including four of the top seven finishers in the 1972 Olympic marathon)
soon began wearing them. By 1974, the company was well on its way
with 250 employees, sales operations in Canada and Australia, a factory
in New Hampshire, and $4.8 million in revenues.
Olympic runner Steve Prefontaine-another Bowerman protégée whose
crusades on behalf of both better equipment and the sport itself-helped
inspire the company's direction until his tragic death in a 1975 car crash.
The entrepreneur and the coach pooled their complimentary talents and
forged ahead. Named for the Greek goddess of victory, their hot new
company achieved one win after another in shoe design and the business
world. Runners loved their product and retailers loved selling them.
Tennis great John McEnroe became the first pro athlete to sign an
endorsement deal with them. And at the end of the decade, with 2,700
employees and 50 percent of the market, they went public.
The early 1980s was a period of expansion in product line, market
penetration, and consumer reputation. By the time its first apparel items
appeared, Nike's swoosh could be found in over 40 countries. Fifty-eight
athletes at the Los Angeles Olympics, including Joan Benoit and Carl
Lewis, captured 65 medals while wearing Nike shoes. And in one of the
most serendipitous deals ever consummated between a corporation and
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an individual, Nike and Chicago bulls rookie Michael Jordan agreed in
1985 to co-produce a line of Air Jordan basketball shoes and related
sports clothing. One year after this monumental alliance, Nike's annual
revenues topped the magical $1 billion mark for the first time.
But even while its Jordan products were wholly redefining the sporting
goods industry, Nike was experiencing problems that threatened its
success. An assortment of distribution and sales-department illsstemming
from growing pains as well as the company's notoriously insular
culture-led to a series of earnings bumps. After some major internal
introspection, various operational changes followed. The iconoclastic "Just
Do It" campaign, along with an urban recreation program called P.L.A.Y.
(Participate in the Live of America's Youth), along with various
environmental efforts, also were launched. Technological advances, for
which Nike was long known, remained on track. Within five years, the
combination drove revenues steadily back to more than $3 billion. The
addition of improved sports-specific apparel in the 1990s, along with the
signing of a promising young golfer named Tiger Woods, elevated Nike
even further into legendary corporate circles.
But then the shoe hit the fan. Ongoing criticism of the way its foreign
workers were being treated gave the company a very public black eye.
Footwear tastes shifted from Nike's strengths, while some key up-andcoming
trends were completely overlooked. Advertising, which was
traditionally a Nike strength, fell flat. And it alos failed to take early
advantage of the World Wide Web. Nike still captured the lion's share of
the athletic footwear market with great shoes designed for everything
form cross-country to cheerleading, but the juggernaut that had produced
one of the world's most recognizable brand names had indeed hit the
Phil Knight, a maverick as well as a tough businessman knew it was time
to stop playing around. He admitted that the company's globalization
efforts had proceeded too fast and spread its resources to thin. He
launched a massive restructuring program that included 1,900 layoffs and
a significant reduction in the number of products carrying the Nike logo.
He expanded the orientation for most new hires from a single to two full
days, in hopes that everyone would more fully understand the historical
basis under which the legendary Nike culture had developed. He also spun
off the line of hardcore sports apparel called All-Condition Gear, or ACG,
creating a separate operation with its own staff, budget, and marketing
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And, perhaps most significantly, Knight publicly began to examine Nike's
policies toward its low-paid labor force in developing countries. He
admitted that neither he nor his company had handled the matter very
well in the past. To help change that, he brought Maria Eitel in from
Microsoft to serve as Nike's first vice-president for corporate
responsibility. She now has a staff of 95, and her efforts have been
grudgingly acknowledged by even some of Nike's harshest critics.
Using ACG and its newly formalized center, Nike is trying to bring back
former customers who may have had their heads turned in recent years
by other suitors. It also is working hard to attract the active young crowd
that in the past never gave them a second look. The Internet, at last, is
becoming a part of it. So are edgier commercials on TV and in print. The
company is researching ways to shorten the cycle between design and
manufacturing so it can react more quickly to new trends, and improve
the supply lines with which it meets resultant retail demand. It also has
been trimming expenses. Through it all, Knight has conveyed the
unmistakable message that his company will not quit-and competitors
better prepare for an exhausting sprint to the finish line.
The world may no longer be sneaker-crazy and Nikes may have fallen
somewhat out of favor. But athletic footwear is here to stay. And a lot of
people are betting that Nike, which led the revolution, will remain at the
front of the pack.
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